When Patents Get Political

Last month, Senate Majority Leader Harry Reid (D-NV) withdrew from consideration until 2009 a bill that would have represented the first major overhaul of American patent laws in more than half a century. A landmark patent reform bill passed the House of Representatives in September 2007 and is still pending before the Senate. In very broad strokes, the debate pits the hardware and software industries against pharmaceutical and biotechnology companies.

The Coalition for Patent Fairness—whose flagship members include Amazon, Apple, Cisco, Dell, Google, Microsoft, and Time Warner—strongly supports the legislation. In particular, it has applauded those portions of the bill that would place reasonable limits on damage awards in patent cases and that would discourage “forum shopping” (i.e., choosing favorable jurisdictions in which to file suit) by patent holders. This group argues that “the U.S. economy is increasingly bogged down in patent disputes that drain billions of dollars that would otherwise be invested in creating jobs, developing new innovations, passing savings along to consumers and increasing shareholder value.”

In contrast, the Biotechnology Industry Organization (BIO)—which represents more than 1,100 biotech companies and universities—opposes the legislation in its current form. Patents are the lifeblood of biotech and pharmaceutical companies, and a BIO representative recently told the Senate Judiciary Committee that “the potential harm of several of the [bill’s] provisions” outweigh its benefits.

Two top executives at GlaxoSmithKline urged Senators Patrick Leahy (D-VT), the Judiciary Committee chairman, and Arlen Specter (R-PA), the ranking member, to scrap a section of the bill that would require patent applicants to search for prior patents and papers related to their own invention. (Currently, only officials in the Patent and Trademark Office perform such searches.) The GlaxoSmithKline executives argued that this measure would “impose essentially limitless and undefined burdens on applicants”

To be sure, not allcomputer companies support the legislation, and not allbiotech firms oppose it. Groups like the Innovation Alliance and others representing smaller software and hardware developers that rely heavily on patent protection have vigorously opposed the bill.

Various intellectual property trade groups have arrayed themselves on different sides. The Intellectual Property Owners Association has expressed support for certain measures, but has rejected others, including the new searching requirement. Likewise, the American Intellectual Property Law Association, which boasts its own political action committee, has opposed some portions of the bill while backing others. Both groups have been tracking the legislation closely.

Perhaps most intriguingly, a coalition of labor unions has come out in vigorous opposition to the Senate version of the bill. The group—which includes UNITE HERE, several AFL-CIO subdivisions, and the United Steelworkers—recently wrote to every U.S. senator, claiming that the legislation would hinder “sorely needed new investment in domestic manufacturing.” It asserted that now—in the midst of “the current economic downturn”—was not the time to contemplate changes that “increase the likelihood of American inventions being stolen and provide incentives for American manufacturers to simply license their technology for production overseas.” Of course, this group failed to mention the fact that many large American firms, including Qualcomm, heavily leverage their patents by licensing manufacture to other companies, including international ones.

In some ways, the politicization of patent reform is regrettable. Passage of the existing (now decades-old) patent statute did not require PACs, lobbyists, and dueling press releases. On the other hand, the political process is functioning as it should, with interested parties free to contact their elected representatives to express concerns over pending legislation. Because intellectual property issues in general, and patents in particular, constitute such a critical part of the high-tech economy and affect the lives of average Americans, there’s nothing inappropriate about industry groups, labor unions, and others petitioning the government to hear their thoughts. You might even call it the IP version of the American way.